A strategy to optimise used car stock management is a factor driving results at Cambria Automobiles, which today reported annual sales passing half a billion pounds and a 42.6% jump in profit before tax.
Referred to internally as ‘velocity’, the strategy has brought the average used car days in stock down to 26.9, compared to the industry benchmark of 45 days cited by ASE and the actual industry average of 54.6 days.
Driven by KPIs on stock acquisition and preparation, marketing and presentation, real-time price adjustments to remain competitive, and F&I built into the sales process, the results equate to an annual stock turn of 13, and average gross profit per unit of £1,395, up 5.3% year-on-year.
Cambria’s used car return on investment improved to 137% in the year from 122% in 2014, and its used car sales contributed to 45% of its total 2015 revenues of £523.8 million.
Finance director James Mullins told AM: “The used car performance in the core business was the real star, with a £1m increase in gross profit.”
It equated to £50 extra earnings from every unit, which he said shows that any marginal gains made across the business, in a little and often fashion, can make a real impact to the financial performance.
Cambria’s financial highlights for the year ended August 31, 2015:
- Revenue up 16.4% to £523.8m
- Underlying profit before tax in 2015 up 42.6% to £7.7m.
- Underlying operating profit up 44.1% to £8.5m.
- Underlying PBT margin up 0.3ppts to 1.5%.
Cambria has secured £37m new five-year banking facilities and aims to continue along its growth trajectory to become a £1bn turnover business, through organic growth and a couple of small scale acquisitions each year, particularly in the premium and luxury segments.
“We’re excited about the future, we still remain active in acquisitions and mergers and the new banking arrangements gives us a lot more firepower and confidence,” said chief executive Mark Lavery.
Cambria’s 2015 new car volumes were up 9% overall (1.1% like-for-like) with a 12.6% uplift in profit per unit(PPU), and used vehicle volume was up 4.4% (1.3% like-for-like) with a 5.3% rise in PPU.
Service and bodyshop hours sold was 7.8% ahead year-on-year.
During the year Cambria closed its only Citroen dealership, at Swindon in a solus showroom next door to its Grange Jaguar outlet, which it had operated since the group was founded in 2006 on taking over Swindon Motorpark. This site will be redeveloped as home to a combined Jaguar Land Rover dealership in line with the carmaker’s new showroom standards.
Lavery said Cambria is very happy to be on board with Jaguar Land Rover, and to meet the investment demands of the brands, given that it can see a return through their global growth drive.